Pension schemes support proposed legal changes
2 months ago, 11 July 19:00
Pension administrators have supported proposed legal changes to rein in employers who fail to remit pension deductions.
They say this will save trustees in the Sh1 trillion industry time and money spent chasing errant employers or taking them to court.
Treasury secretary Henry Rotich is seeking to empower the Retirement Benefits Authority (RBA) to intervene in cases where public and private employers fail to wire contributions to the retirement schemes.
Mr Rotich in the Budget Statement asked the National Assembly to amend the Retirement Benefits Act to enable the regulator to act swiftly and go hard on the defaulters.
Some rogue State agencies and companies have been implicated in cases where they divert contributions to other functions against the provision of the Act.
Counties have, for example, come under fire for withholding workers’ savings over the years, with the dues estimated at Sh30 billion as at last December, according to CPF Financial Services. CPF manages the pension contributions by workers in the counties and associated entities through Local Authorities Pension Trust Retirement Benefits Scheme and Laptrust (Umbrella) Retirement Fund.
Pension fund administrator Zamara, which manages assets worth about Sh23 billion for 185 entities, said trustees have sometimes been forced to plead with the employers when they delay or refuse to remit contributions.
Chief executive Sundeep Raichura said trustees have in the past taken some of the employers to court and the RBA appointed interim administrators to help recover the withheld cash.
“When an employer delays or simply refuses to remit contributions, the avenues for getting that money has been limited,” Mr Raichura said.
“The proposed amendments that empower the regulator… will be a bigger deterrent now and at least there are more safeguards that are brought in to protect members.”
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